Comment: Now more than ever, investment in people reaps more than ever

As public spending soars to more than £190bn, over nine million workers have used the furlough scheme and the global economy takes a £7.7trn hit, it is undeniable that the global coronavirus pandemic has generated some eye-watering numbers.

In the UK, the establishment of the UK furlough scheme has been at the forefront of those figures. Created by the government earlier in the year to assist organisations and employees through a challenging period of instability, these measures have been costly, but essential for the UK economy and those that make it work.

When furlough was put in place, the future of many companies was on a knife-edge as lockdown instructions were issued. As a result, millions of jobs were in severe danger. If not for furlough, a wave of redundancies would have seen the numbers claiming unemployment aid soar even higher. It would have been catastrophic.

But time has moved on since March, and, now that there are signs of economic recovery, the current furlough scheme is ending and the Job Support Scheme will replace it. This means employers have to pay 55 percent of pay, while the government pays for 22 percent. This is a significant increase, but very few expected the furlough scheme to continue in its current form, even as we step into a second wave.

Debate rages at decision time for furlough

With the nominated end to the furlough support coming into view, influential stakeholders from unions to employer representatives had been asking the Chancellor to reconsider its imminent closure. There is a significant contingent urging the UK to follow the route of countries such as Germany, which have decided to keep business support measures in place into 2021.

Many believe that without a scheme as bold as furlough, employment rates will fall off a cliff edge, leaving millions without work. The argument is that a continuation of the furlough scheme or another method such as the Job Support Scheme, would help not only stimulate the economy but avoid a significant credit default on personal debt that could run into the billions.

But there is another argument for this support to continue – the mental health of UK workers.

The price and profit of wellbeing

The Office for National Statistics (ONS) says that since the start of the pandemic the nation’s mental wellbeing has plummeted as health, employment and personal finance worries have strangled optimism.

Increased levels of depression, anxiety and loneliness are all on the rise, and employees are struggling to cope with social distancing measures, remote working, and childcare issues.  The unseen financial impact of this worrying scenario needs to be considered by the politicians deciding whether to withdraw help such as the furlough scheme in the current circumstances.

In-depth analysis carried out for our Divided Together report points to the danger of ignoring workplace mental health issues. The research highlighted that 43 percent of all workers are worried about job security and this, combined with other factors, is having a detrimental impact on mental health.

Over 50 percent say they have seen their mental health deteriorate since the crisis began – a figure that increases to 55 percent for employees who are trying to juggle children and work responsibilities from home and 66 percent for furloughed parents.

Treating employee wellbeing seriously

Many companies have already reacted to this growing issue and are positioning employee wellbeing at the top of their business priorities.

A third (35 percent) of HR leaders across sectors in the UK we spoke to say they had increased their wellbeing budget recently, and the same portion are planning to invest in the coming months. While the average wellbeing spend per head is now at £150 a year, there is a significant minority of organisations (14 percent) investing more than £2,000 per year, per person, in the wellbeing of their employees.

This is a repeat of a trend we have seen in previous testing times.

During the banking crisis of 2008, the number of businesses creating wellbeing strategies increased. In a recent study by the London School of Economics, improving wellbeing was found to boost employee productivity, satisfaction and retention within a company – all directly linked to business performance.

Our own research has found that 74% of HR leaders attribute greater physical health and wellbeing to a fall in absence. With the average UK company employing 150 people spending £120,000 a year on absence, this is an area business cannot afford to ignore. However, when combined with presenteeism – a growing issue where employees are working but not happy and struggling to concentrate – the cost to the UK economy is £81bn a year, according to Cambridge University.

Applying the company findings to the country

These figures suggest that businesses recognise that the mental wellbeing of their employees is directly related to their performance. Those that have found a way to improve employee wellbeing have seen better retention, satisfaction and performance. It is these learnings that should also have been considered when weighing up whether to continue support for UK employees after the initial furlough period ends. The new system didn’t have to be a continuation of furlough, but it needed to have wellbeing in mind.

From our research and countless other studies, investing in people goes far beyond investing in salaries. Yes, the jobs are important and mere job security for those nine million who have been on furlough will go a long way to easing mental stresses, but if this pandemic has taught us anything, it’s that as businesses, countries and a global community, our health is our wealth. Acknowledging and investing in our mental as well as fiscal rehabilitation will help secure a sustained recovery that is vital to rebuilding business for the future.